Options on how to offset the Payroll Tax Deferral?

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JJTorrico
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Joined: Sat Mar 14, 2020 7:29 am

Options on how to offset the Payroll Tax Deferral?

Post by JJTorrico »

With the payroll tax deferral going into effect for the next pay period (for those of us who are bi-weekly) I have been racking my brain on how to offset the negative aspects of this deal. I initially thought I would increase my TSP contributions in the amount the net gain from this, approximately 7.65 percent. However, I hate writing checks to the IRS in March or April, so I thought I might withhold more money on Federal to counteract what might be an enlarged tax bill. Now if my employer (USPS) decides to double the FICA withholding for the first four months of 2021, I am not sure what play I have left. I am open to any ideas on this.

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bloobs
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Re: Options on how to offset the Payroll Tax Deferral?

Post by bloobs »

JJTorrico wrote:With the payroll tax deferral going into effect for the next pay period (for those of us who are bi-weekly) I have been racking my brain on how to offset the negative aspects of this deal. I initially thought I would increase my TSP contributions in the amount the net gain from this, approximately 7.65 percent. However, I hate writing checks to the IRS in March or April, so I thought I might withhold more money on Federal to counteract what might be an enlarged tax bill. Now if my employer (USPS) decides to double the FICA withholding for the first four months of 2021, I am not sure what play I have left. I am open to any ideas on this.
This payroll tax E.O. is B.S. that does more harm than good to us. As such, deal with it as simply and expediently as possible.

1. Open a new checking account, start dumping 7.65% of your gross pay in there, 2. prepare to have it all paid back however your employer tells you in January, 3. close checking account.

Done and forgotten.

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ArrieS
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Re: Options on how to offset the Payroll Tax Deferral?

Post by ArrieS »

Yea, exactly what bloobs said. I plan on setting an allotment to a high yield savings account so I don't have to think about transferring it and it'll feel like I never stopped paying it. Collect the interest and pay it next year.
OCTOBER: This is one of the peculiarly dangerous months to speculate in stocks in. The others are July, January, September, April, November, May, March, June, December, August, and February. - Pudd'nhead Wilson's Calendar

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robika
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Re: Options on how to offset the Payroll Tax Deferral?

Post by robika »

I was thinking about increasing my TSP withholding the "extra amount" in each paycheck from now thru the end of December and then reducing the withholding double from January thru April and then putting it back to where it currently is after all the hullabaloo is over. It may not be perfect but it should be pretty close.
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TopNotch
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Re: Options on how to offset the Payroll Tax Deferral?

Post by TopNotch »

I believe that only employees earning less than $4,000 biweekly are eligible for the deferral.
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stilljammi
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Re: Options on how to offset the Payroll Tax Deferral?

Post by stilljammi »

I think what bloobs suggested is best. Deal with the extra money this year intelligently, but make sure it's a pretty liquid account.

This is basically the government getting into the payday loan business, so pay it back as soon as you can, as interest and fees will accrue if you go past due. With that said, it's a gambit that the next Congress is going to pass a bill to forgive the tax, so maybe we won't need to worry about it. Better to be safe than sorry!

Chulke
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Re: Options on how to offset the Payroll Tax Deferral?

Post by Chulke »

I highly doubt we will get exempted from having to pay this back...more than likely they're gonna want to take it out of any potential tax return you are entitled too once you file in 2021. And if you're not eligible for a tax return, as in you paid in the right amount, or you end up owing....they're gonna tack it on so that you do owe....

I am not a big fan of owing government anything....In fact I'd rather overpay and then file for a return....The pity is you can't collect interest on what they owe you in the end...but if you owe them....you can bet your bottom dollar they're gonna try and tack on the interest! BS in my opinion!!!


Anyway....I agree with Bloobs here....set it aside and don't do anything with it....cause when they do come for it...You're gonna wish you had it....real inflation is gonna go through the roof next year in my opinion, (it's just my opinion), and every cent is gonna count!



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Scarfinger
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Re: Options on how to offset the Payroll Tax Deferral?

Post by Scarfinger »

Our MSA just got out of a meeting and she is saying that there will be a 6.2%? employee tax holiday for the next 4 months. Then the 1st 4 months of 2021 they (IRS or employer)? will withdraw 12.4% each month to recover the tax back.

Sounds like a gimmick to me.
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PostOakGuy
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Re: Options on how to offset the Payroll Tax Deferral?

Post by PostOakGuy »

Of Course we will not have to pay it back.....It's so strange how people get worked up over something. Enjoy the extra money this year.....I have to hear about this at working constantly....Geez
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ArrieS
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Re: Options on how to offset the Payroll Tax Deferral?

Post by ArrieS »

PostOakGuy wrote:Of Course we will not have to pay it back.....It's so strange how people get worked up over something. Enjoy the extra money this year.....I have to hear about this at working constantly....Geez
Well I'm sure we'll pay it back if Trump loses. Since it's his executive order that stops the tax payments and it would take an act or congress to forgive the debt, nothing better then to have people have a large tax bill in January that's Trumps fault on his way out the door.
OCTOBER: This is one of the peculiarly dangerous months to speculate in stocks in. The others are July, January, September, April, November, May, March, June, December, August, and February. - Pudd'nhead Wilson's Calendar

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mjedlin66
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Re: Options on how to offset the Payroll Tax Deferral?

Post by mjedlin66 »

PostOakGuy wrote:Of Course we will not have to pay it back.....It's so strange how people get worked up over something. Enjoy the extra money this year.....I have to hear about this at working constantly....Geez
Yes, you will have to pay it back.

Congress would have to forgive the debt. And since the vast majority of Americans are not getting this 4-month deferral, it wouldn't be fair to forgive that tax for the people who did get the deferral.
Owner/creator of TSPcalc.com - "Know your numbers"

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bloobs
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Re: Options on how to offset the Payroll Tax Deferral?

Post by bloobs »

ArrieS wrote:
PostOakGuy wrote: I'm sure we'll pay it back if Trump loses..
I am also certain we will also have to pay it back if he wins...

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jlozano042
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Re: Options on how to offset the Payroll Tax Deferral?

Post by jlozano042 »

My math teacher once told me that EVERYTHING in life must be paid back - somehow!

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bloobs
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Re: Options on how to offset the Payroll Tax Deferral?

Post by bloobs »

jlozano042 wrote:My math teacher once told me that EVERYTHING in life must be paid back - somehow!

There is a Russian saying that the only free cheese is one from a mousetrap.

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jlozano042
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Re: Options on how to offset the Payroll Tax Deferral?

Post by jlozano042 »

bloobs wrote:
jlozano042 wrote:My math teacher once told me that EVERYTHING in life must be paid back - somehow!

There is a Russian saying that the only free cheese is one from a mousetrap.
EXCELLENT saying ... I will be adding that to my list of sayings to pass on to my children! :wink:

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